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Why would the consumer buy a smartphone PERS app from Philips?

Fri, 08/29/2014 - 11:47 - Laurie Orlov

Philips Lifeline has had, to say the least, an unusual week. First they launch a smartphone PERS application that makes no sense. The press release quotes the Philips/Georgetown GSEI study that repeats that tiresome cliché that "seniors want to stay as independent as possible as they get older" -- really, no kidding. Therefore smartphone-enabled seniors would want this $13.95/month service. Since they put out a press release and sought media attention with this app, it is safe to say that want us to know about it. And in volume, this would be a nice incremental revenue stream and another use of their highly trained call center reps. But what volume? 19% of the 65+ population owns a smartphone -- that's a market of 8 million people. But two-thirds of adults with smartphones download no apps -- using only those which came with the phone. Now we're down to 2.8 million in an available market.

Philips has been losing market share to others for years. When the Dutch company bought Lifeline in 2007, according to Hoovers, they led the PERS market with 720,000 subscribers. A number of companies, including VRI, MobileHelp, Numera's Libris (increasingly appearing as an OEM device), and GreatCall have been very focused and apparently quite successful at taking market share away in its target market of older women living alone. Let's assume that 10% of the PERS target user base (worried older women living alone) today is interested in -- or their families seek -- a mobile PERS offering with GPS tracking outside the home. After many false starts in the mobile PERS space, can Philips finally enter that market through an app on a smartphone that the target customer generally doesn't own?

Maybe they can market to those avoiding the stigma of devices. Let's say that a cell phone breaks and an older woman who lives alone goes to a phone store to replace. She is independent, but concerned. There are virtually no feature phones left for her to buy, so she is talked into or attracted to a smartphone. Will the sales rep help her think about downloading the Philips app? Unlikely -- it's probably as unlikely as Verizon marketing its SureResponse product when it was released. Perhaps we will see Philips advertising in the AARP bulletin, or on radio to encourage smartphone purchases plus the new app for their parents? Highly unlikely. In fact, this app has no obvious channel other than the firm's own reps, as in 'By the way, do you have a smart phone, would you like our app?'

There's only one way that this announcement makes any sense, and that is that Phillips is planning some sort of wearable device in the near futre. I would expect an ugly smartwatch device that acts as an mPERS and connects to the phone through the app. A device similar to the one recently announced by Lively.